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Foreign Reserves Hit $20B
International reserves have grown to $20 billion in 2023, a 12.3 percent rise over 2022. According to the National Bank of Cambodia, the increase, including foreign currencies, gold, and Special Drawing Rights (a foreign exchange reserve assets defined and maintained by the International Monetary Fund), is enough to cover more than seven months of imports. Despite market uncertainties and rising interest rates around the world, Cambodia's banking system seems to have been able to maintain a modicum of stability for the time being.
Infrastructure Development Roundup
Koh Rong International Eco-Tourism Airport has begun construction, a $300 million investment by the Royal Group. The airport is expected to complete its first phase in five years.
The Phnom Penh Autonomous Port (PPAP) has reported strong growth in services, particularly in passenger transport. USAID, in partnership with Khmer Cold Chain, launched a new cold chain facility at PPAP, a first-of-its-kind facility in Cambodia. The Khmer Times reports “The 6,046-cubic-metre cross-docking facility [… will] greatly boost Cambodia’s ability to store and export temperature-sensitive agricultural products, thereby minimising food loss and waste.” The new facility should especially be a boon for smallholder farmers.
An expressway project connecting Phnom Penh-Siem Reap-Poipet is underway, with environmental impact assessments expected to be completed mid-year.
The Koh Tonsay Port Phase 2 development is more than 70% complete, promising improved transportation and delivery of economic growth to the region.
Finally, CAMGSM Cellcard has received a $70 million bond guarantee that will allow it to make telecom infrastructure improvements, including improving 4G and 5G infrastructure. This is expected to be to the benefit of more than 1 million consumers and will create 260 jobs.
Read more: Khmer Times (Koh Rong Airport), Cambodia Investment Review (PPAP Growth), Khmer Times (Cold Storage Inauguration), Khmer Times (Cold Storage Facility) Khmer Times (Phnom Penh-Poipet Expressway), Cambodia News English (Koh Tonsay Port), Cambodia Investment Review (Telecom Infrastructure)
Green Energy A Magnet for EU Investment
Current solar power capacity of 432MW, projected to reach 3,155MW by 2040, puts Cambodia in a favorable position in ASEAN’s green energy scene. A report by the EU and BMZ touts Cambodia's attractiveness for EU investments, especially given its energy mix of hydroelectric (45%) and solar power (5%). The report notes the need for clean energy certifications that can be used to help EU companies meet their ESG goals. Cambodia still does have higher energy costs than its neighbors, but has seen a 22% reduction in electricity prices from 2015 to 2020; expectations are for further efficiencies to be found.
Read more: Khmer Times
Balancing Ties with China and the US
This article covers territory familiar to many, but is a good review of how Cambodia is shifting from a historically contentious relationship with China to an 'ironclad' alliance, as ties with the US have simultaneously deteriorated, mainly due to security and political concerns.
Read more: East Asia Forum
'China Plus 1' To Accelerate Investment Inflows
The 'China Plus 1' strategy, a common international hedge to China-US trade disruptions, positions Cambodia as an attractive alternative for multinational companies looking for resilient supply chains. A report by GIZ and EuroCham Cambodia touts Cambodia's potential as a secondary production hub in Asia, leveraging cost-effective labor and geographic location. Some negatives are noted, but positive developments in tax regulations and digitalization initiatives are underway to address many of the most thorny issues.
Read more: Khmer Times
Kampot Emerges as New Hotspot
Kampot, once a sleepy village, is turning into a growing tourism and investment hub. The province has seen a surge in visitors, with over 400,000 tourists during the New Year, rocketing ahead of traditionally popular tourist destinations like Sihanoukville and Siem Reap. This growth is accompanied by major brands like Starbucks and Brown cafes setting up in Kampot, alongside a booming real estate sector. The province's transformation, driven by factors like Chinese investment in nearby regions and its appeal to international retirees, positions Kampot as a hotspot in Cambodia's future economic aspirations.
Read more: Khmer Times
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Growth, Trade Dynamics, Regional Partnerships
The economy is projected to grow by 6.4% in 2024, driven by tourism and manufacturing, following on a 5.5% increase in 2023. Trade with South Korea has seen a rise in exports, passing $281 million in 2023, a 20% increase from the previous year, but with a total bilateral trade with South Korea declining 3.5%. Trade with Singapore grew by more than 7% in 2023, topping $900 million, with a substantial trade deficit.
China has been Cambodia's largest source of foreign direct investment (FDI) for many years, investing more than $3 billion in 2023. The Sihanoukville Special Economy Zone (SSEZ) celebrated the 10th anniversary of the Belt and Road Initiative, and Chinese enterprises have built and operated 10 hydropower stations and 2 thermal power stations in Cambodia. China also helped Cambodia build or upgrade nearly 4,000 kilometers of roads and 9 grand bridges, and trained nearly 1,200 people through bilateral, multilateral, degree, and non-degree programs.